Non-opposition to a notified concentration

(Case M.11200 – MSI / VALORIZA)

(Text with EEA relevance)

(2023/C 285/01)

On 8 August 2023, the Commission decided not to oppose the above notified concentration and to declare it compatible with the internal market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004 (1). The full text of the decision is available only in English and will be made public after it is cleared of any business secrets it may contain. It will be available:

—	in the merger section of the ‘Competition policy’ website of the Commission (https://competition-cases.ec.europa.eu/search). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes,

—	in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/homepage.html?locale=en) under document number 32023M11200. EUR-Lex is the online point of access to European Union law.

---

(1)  OJ L 24, 29.1.2004, p. 1.

Euro exchange rates (1)

11 August 2023

(2023/C 285/02)

1 euro =

	Currency	Exchange rate
USD	US dollar	1,1004
JPY	Japanese yen	158,97
DKK	Danish krone	7,4510
GBP	Pound sterling	0,86415
SEK	Swedish krona	11,8075
CHF	Swiss franc	0,9617
ISK	Iceland króna	144,70
NOK	Norwegian krone	11,4225
BGN	Bulgarian lev	1,9558
CZK	Czech koruna	24,103
HUF	Hungarian forint	382,80
PLN	Polish zloty	4,4368
RON	Romanian leu	4,9407
TRY	Turkish lira	29,7632
AUD	Australian dollar	1,6850
CAD	Canadian dollar	1,4791
HKD	Hong Kong dollar	8,6007
NZD	New Zealand dollar	1,8299
SGD	Singapore dollar	1,4850
KRW	South Korean won	1 459,31
ZAR	South African rand	20,7138
CNY	Chinese yuan renminbi	7,9584
IDR	Indonesian rupiah	16 811,91
MYR	Malaysian ringgit	5,0475
PHP	Philippine peso	62,175
RUB	Russian rouble
THB	Thai baht	38,547
BRL	Brazilian real	5,3656
MXN	Mexican peso	18,7092
INR	Indian rupee	91,0970

---

(1)  Source: reference exchange rate published by the ECB.

Opinion of the Advisory Committee on mergers at its meeting on 3 May 2023 concerning a draft decision in case M.10646 – MICROSOFT / ACTIVISION BLIZZARD

Rapporteur: Romania

(Text with EEA relevance)

(2023/C 285/03)

Concentration

1.

The Advisory Committee (15 MS) agrees with the Commission that the notified transaction constitutes a concentration within the meaning of Article 3(1)(b) of the Council Regulation (EC) No 139/2004 of 20.1.2004 on the control of concentrations between undertakings (the ‘Merger Regulation’) (1).

Market definition

Product market definition

2.

a) The Advisory Committee (15 MS) agrees with the conclusions reached by the Commission in the draft Decision in relation to the definition of the relevant product markets for development and publishing of video games segmented by platform (PC, console, mobile), by types of video game (AAA games vs. non-AAA games) and by genre (action and adventure, shooter/battle royale, role-playing games, sports, racing, fighting, and strategy). b) The Advisory Committee (14 MS) agrees with the conclusions reached by the Commission in the draft Decision in relation to the definition of the following relevant product markets distribution of video games segmented by platform (PC, console, mobile); 1 MS abstains. c) The Advisory Committee (15 MS) agrees with the conclusions reached by the Commission in the draft Decision in relation to the definition of the following relevant product markets operating systems for PC.

Geographic market definition

3.

a) The Advisory Committee (15 MS) agrees with the conclusions reached by the Commission in the draft Decision in relation to the definition of the relevant geographic market for the product markets development and publishing of video games (i.e., at least EEA-wide, if not worldwide). b) The Advisory Committee (14 MS) agrees with the conclusions reached by the Commission in the draft Decision in relation to the definition of the relevant geographic market for the product markets distribution of video games (i.e., at least EEA-wide, if not worldwide); 1 MS abstains. c) The Advisory Committee (15 MS) agrees with the conclusions reached by the Commission in the draft Decision in relation to the definition of the relevant geographic market for the product markets operating systems for PC (i.e. worldwide).

Competitive assessment

4.

The Advisory Committee (15 MS) agrees with the Commission’s assessment that the notified transaction is unlikely to significantly impede effective competition, as a result of horizontal non-coordinated effects arising from the combination of Microsoft’s and Activision Blizzard’s activities.

5.

The Advisory Committee (15 MS) agrees with the Commission’s assessment that the notified transaction is unlikely to significantly impede effective competition as a result of vertical non-coordinated effects arising from the targeted foreclosure of rival distributors of console video games as a result of the merged entity’s targeted total or partial input foreclosure strategy by restricting or degrading access to Activision Blizzard’s AAA shooter console video games.

6.

The Advisory Committee (15 MS) agrees with the Commission’s assessment that the notified transaction would likely significantly impede effective competition as a result of vertical non-coordinated effects arising from the targeted input foreclosure of rival distributors of console or PC video games that offer cloud game streaming services as a result of the merged entity foreclosing the supply of Activision Blizzard’s console and PC games.

7.

The Advisory Committee (15 MS) agrees with the Commission’s assessment that the notified transaction would likely significantly impede effective competition on the market for the supply of PC OS as a result of conglomerate effects arising from tying of Activision Blizzard’s games and of Microsoft’s distribution of games via cloud game streaming services to the Windows OS.

Commitments

8.

The Advisory Committee (12 MS) agrees with the Commission’s conclusion that the Consumer License and the Streaming Provider License offered by the Notifying Party on 20 April 2023 remove concerns as to the (i) input foreclosure of providers of rival distributors of console or PC video games that offer cloud game streaming services as a result of the merged entity foreclosing the supply of Activision Blizzard’s console and PC games and (ii) conglomerate effects arising from tying of Activision Blizzard’s games and of Microsoft’s distribution of games via cloud game streaming services to the Windows OS. 1 MS disagrees. 2 MS abstain.

9.

The Advisory Committee (12 MS) agrees with the Commission that, subject to the full compliance with the final commitments offered by the Notifying Party on 20 April 2023, the notified transaction is not likely to significantly impede effective competition in the internal market or in a substantial part of it. 1 MS disagrees. 2 MS abstain.

Compatibility with the internal market and the Agreement on the European Economic Area

10.

The Advisory Committee (12 MS) agrees with the Commission that the notified concentration must therefore be declared compatible with the internal market and the Agreement on the European Economic Area (2) in accordance with Article 2(2) and Article 8(2) of the Merger Regulation and Article 57 of the Agreement on the European Economic Area. 1 MS disagrees. 2 MS abstain.

---

(1)  OJ L 24, 29.1.2004, p. 1.

(2)  OJ L 1, 3.1.1994, p. 3.

Final Report of the Hearing Officer (1)

Case M.10646 – Microsoft / Activision Blizzard

(Text with EEA relevance)

(2023/C 285/04)

1.   INTRODUCTION

1.

On 30 September 2022, the Commission received a notification of a proposed concentration by which Microsoft Corporation (‘Microsoft’, or the ‘Notifying Party’) intends to acquire, within the meaning of Article 3(1)(b) of the Merger Regulation (2), sole control over Activision Blizzard, Inc. (‘Activision Blizzard’) (the ‘Proposed Transaction’). For the purposes of this interim report, Microsoft and Activision Blizzard are together referred to as the ‘Parties’.

2.   PROCEDURE

2.1.   Article 6(1)(c) decision

2.

On 8 November 2022, the Commission adopted a decision to initiate proceedings pursuant to Article 6(1)(c) of the Merger Regulation (the ‘Article 6(1)(c) decision’), as the Commission’s first phase investigation raised serious doubts as to the compatibility of the Proposed Transaction with the internal market.

3.

On 24 November 2022, the Notifying Party submitted its response to the Article 6(1)(c) Decision.

2.2.   First extension of the time-limit

4.

On 18 November 2022, the Commission extended the time-period of 90 days in Article 10(3), first subparagraph, of the Merger Regulation for the adoption of a decision pursuant to Article 8 of the Merger Regulation in relation to the Proposed Transaction by 10 working days, pursuant to Article 10(3), second subparagraph, first sentence, of the same regulation.

2.3.   Statement of objections

5.

On 31 January 2023, the Commission adopted a statement of objections addressed to the Notifying Party (the ‘SO’). The SO was formally notified to the Notifying Party on 1 February 2023, after an advance copy was sent on 31 January 2023.

2.4.   Access to the file

6.

The Notifying Party was given access to the file on 1 February 2023 by means of two DVDs. Furthermore, with regard to part of the documents in the file, the Directorate-General for Competition (‘DG Competition’) provided access by means of a data room, which took place between 2 and 8 February 2023.

7.

By letter of 19 February 2023 to the Hearing Officer, Microsoft submitted a request for further access to the file pursuant to Article 7 of Decision 2011/695/EU (the ‘HO Request’). Microsoft asked in particular that its external advisors be allowed to access certain confidential data that the external advisors had previously consulted in the data room, still on an outside counsel-only basis but in a less restrictive form, such as a confidentiality ring arrangement. This request related to a particular theory of harm developed by DG Competition in the SO. However, following certain developments in the case, on 2 March 2023, Microsoft’s counsel agreed that there was no need to take a decision on the HO Request at that stage. Microsoft subsequently withdrew the HO Request on 6 April 2023.

2.5.   Reply to the SO

8.

On 14 February 2023, the Notifying Party submitted its reply to the SO, in accordance with the deadline set by DG Competition. In its reply, the Notifying Party requested a formal oral hearing.

2.6.   Interested third persons

9.

During the course of the proceedings, I admitted (pursuant to Article 5 of Decision 2011/695/EU) six undertakings or associations of undertakings as interested third persons.

10.

All interested third persons expressed their interest in participating in a potential oral hearing in this case – and were admitted accordingly, pursuant to Article 6(2) of Decision 2011/695/EU, so as to express their views orally on the Proposed Transaction.

2.7.   Oral hearing

11.

A formal oral hearing took place on 21 February 2023.

12.

Delegates representing the Parties, four interested third persons, the Commission and the competent authority of a Member State were present in the room. Additional representatives of the Parties, the competent authorities of Member States and the Commission and representatives of certain interested third persons participated remotely.

2.8.   Second extension of the time limit

13.

On 1 March 2023, a further extension of 10 additional working days of the time limit set for the adoption of a decision pursuant to Article 8 of the Merger Regulation was adopted by the Commission with the agreement of the Notifying Party, pursuant to Article 10(3), second subparagraph, third sentence, of the Merger Regulation.

2.9.   Letter of facts

14.

On 9 March 2023, the Commission adopted a letter of facts (‘LoF’), in order to inform Microsoft about additional factual elements which were not yet expressly relied on in the SO and which the Commission considered to be potentially relevant to support some of its preliminary conclusions in the SO and substantiate its final decision.

15.

The Commission initially set a deadline for Microsoft to reply to the LoF on 16 March 2023. Upon request from Microsoft, DG Competition subsequently extended this deadline until 20 March 2023. On that date, Microsoft submitted its reply.

2.10.   Commitments

16.

On 16 March 2023, Microsoft submitted commitments, with a view to rendering the Proposed Transaction compatible with the internal market and the functioning of the EEA Agreement, pursuant to Article 8(2), second subparagraph of the Merger Regulation (the ‘Commitments’). Accordingly, the legal time limit for the Commission decision was automatically extended by 15 working days, pursuant to Article 10(3), first subparagraph of the Merger Regulation.

17.

On 17 March 2023, the Commission launched a market test of the Commitments. The Commission informed the Parties about the results of the market test on 28 March 2023.

18.

On 3 April 2023, following the outcome of the market test, Microsoft submitted a revised set of commitments. These were market tested on 4 April 2023 and the Commission informed the Parties about the results on 14 April 2023.

19.

On 20 April 2023, Microsoft submitted amended commitments (the ‘Final Commitments’) addressing feedback from the market test of the Second Commitments.

2.11.   The draft decision

20.

In the draft decision, the Commission concludes that the Final Commitments address the identified competition concerns and declares the Proposed Transaction compatible with the internal market and the functioning of the EEA Agreement, pursuant to Article 8(2) of the Merger Regulation.

21.

I have reviewed the draft decision pursuant to Article 16(1) of Decision 2011/695/EU and I conclude that it does not deal with any objection in respect of which the Parties have not been afforded the opportunity of making known their views.

3.   CONCLUSION

22.

Overall, I consider that the effective exercise of procedural rights has been respected in the present proceedings.

---

(1)  Pursuant to Articles 16 and 17 of Decision 2011/695/EU of the President of the European Commission of 13 October 2011 on the function and terms of reference of the hearing officer in certain competition proceedings (OJ L 275, 20.10.2011, p. 29) (‘Decision 2011/695/EU’).

(2)  Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation) (OJ L 24, 29.1.2004, p. 1).

Summary of Commission Decision

of 15 May 2023

declaring a concentration compatible with the internal market and the functioning of the EEA Agreement

(Case M.10646 – MICROSOFT / ACTIVISION BLIZZARD)

(notified under document number C(2023) 3139)

(Only the English version is authentic)

(Text with EEA relevance)

(2023/C 285/05)

On 15 May 2023 the Commission adopted a Decision in a merger case under Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (1) , and in particular Article 8(2) of that Regulation. A non-confidential version of the full Decision can be found in English on the website of the Directorate-General for Competition, at the following address: http://ec.europa.eu/competition/elojade/isef/index.cfm?clear=1&policy_area_id=2

1.   THE PARTIES

(1)

Microsoft Corporation (‘Microsoft’ or ‘Notifying Party’, US) is a global technology company headquartered in Redmond, Washington, US. Microsoft offers a wide range of products and services to customers. Relevant to the Transaction, Microsoft is active in the video games business as a developer, publisher and distributor of video games for gaming consoles, personal computers (‘PCs’) and mobile devices. Microsoft also manufactures and offers the Xbox gaming console and related services, including a game subscription service called Game Pass (available for Xbox and PC), and a cloud game streaming services as part of Game Pass’ top-tier version, Game Pass Ultimate.

(2)

Activision Blizzard, Inc. (‘Activision Blizzard’, US) is a developer and publisher of video games based in Santa Monica, California, US. Activision Blizzard develops and publishes video games for gaming consoles, PCs and mobile devices, including franchises such as Call of Duty, World of Warcraft, Diablo and Candy Crush. Activision Blizzard also operates a digital storefront, Battle.net, for the digital distribution of its PC games.

2.   PROCEDURE

(3)

On 30 September 2022, the Commission received a formal notification pursuant to Article 4 of the Merger Regulation by which Microsoft intended to acquire sole control of the whole of Activision Blizzard.

(4)

By decision dated 8 November 2022, the Commission found that the proposed transaction raised serious doubts as to its compatibility with the internal market and initiated proceedings pursuant to Article 6(1)(c) of the Merger Regulation.

(5)

On 20 April 2023, the Notifying Party submitted final commitments (‘Final Commitments’) that render the concentration compatible with the internal market.

(6)

The final decision was consulted with the Member States during the Advisory Committee on Concentrations on 3 May 2023, which provided a favourable opinion. The Hearing Officer provided its favourable opinion on the proceedings in his report which was submitted on the same date.

3.   THE RELEVANT PRODUCT AND GEOGRAPHIC MARKETS

(7)

The decision identifies the following relevant markets: (1) Development and publishing of PC and console games, potentially segmented by (i) platform, i.e. between PC and console; (ii) game genres; and (iii) game types (i.e. between AAA (2) games and non-AAA games). The market for the development and publishing of mobile games was considered as a separate market, and not assessed further in the decision. The geographic scope is at least EEA-wide if not worldwide. (2) Distribution of PC and console games, potentially segmented by platform, i.e. between PC and console. The Commission considered that a distinction by (i) payment model (i.e. between buy-to-play and subscription); and (ii) type of access (i.e. between download and streaming) is not warranted. The distribution of mobile games was considered to be a separate market from the distribution of PC and console games, and not assessed further in the decision. The geographic scope is at least EEA-wide if not worldwide. (3) Supply of PC operating systems (‘OS’). The geographic scope is worldwide.

4.   COMPETITIVE ASSESSMENT

(8)

The Transaction gives rise to a number of horizontally affected relationships, because the Parties’ combined market share exceeds 20 % in several potential markets when considering different available metrics.

(9)

In addition, the Transaction creates vertical links between (i) Activision Blizzard’s game development and publishing activities upstream and Microsoft’s (ii) game distribution activities downstream. The Commission has assessed: (i) the potential customer foreclosure of developers and publishers of console games by restricting or degrading access to Microsoft’s console digital storefronts; (ii) the potential input foreclosure of Microsoft’s rival distributors of PC and console games via multi-game subscription services by restricting or degrading access to Activision Blizzard’s games; (iii) the potential input foreclosure of Microsoft’s rival distributors of console games by withholding or degrading access to Activision Blizzard’s (AAA) shooter console games; (iv) the potential input foreclosure of Microsoft’s rival distributors of console or PC games via cloud game streaming services, by restricting or degrading access to Activision Blizzard’s PC and console games.

(10)

The Transaction also gives rise to conglomerate relationships. In particular, the Commission has assessed two conglomerate relationships arising from links between Microsoft’s supply of the Windows PC OS and Activision Blizzard’s development and publishing of video games.

4.1.   No Horizontal concerns

(11)

The Commission has assessed possible horizontal, non-coordinated effects in a number of potentially affected markets for development and publishing of certain game genres (Shooter, Role-Playing, Action & Adventure, Racing & Flying) and types (AAA games only or AAA and non-AAA games together) of console and/or PC video games. The Commission also assessed possible horizontal effects in the market for the distribution of PC and console video games.

(12)

Regarding the horizontal links in the game development and publishing market, the merged entity’s combined market shares by revenues are below 20 % in the market for the development and publishing of console and PC games. However, in potentially narrower segments, market shares are higher (e.g., [30-40] % in the worldwide development of AAA shooter games on console or [30-40] % in the EEA-wide development of AAA Role-Playing games on PC). The Commission considers that the Transaction does not raise competition concerns as regards horizontally affected markets, primarily because in most cases the merged entity’s shares are limited, and because the increment in share brought about by the Transaction is marginal. For similar reasons, the Commission also considers that no concerns arise from the horizontal link in the distribution of PC and console games.

4.2.   Vertical effects

4.2.1.   No customer foreclosure concerns

(13)

Microsoft’s market share in the downstream market for the distribution of console games is [30-40] % worldwide in 2022. Therefore, the Commission has assessed potential customer foreclosure concerns deriving from the possible foreclosure of rival developers and publishers of console games from access to Microsoft’s console-specific digital storefront. The Commission considers that Microsoft would not have the ability or incentive to engage in a customer foreclosure strategy, primarily because its market share in the distribution of console games is relatively small compared to Sony’s. Therefore, Sony and Nintendo represent an effective alternative for third-party developers and publishers to distribute their games. Furthermore, post-Transaction Microsoft would maintain the incentive to offer third-party games on the Xbox console, to ensure the attractiveness of its game store to gamers.

4.2.2.   No input foreclosure concerns vis-à-vis rival distributors of PC games via multi-game subscription services

(14)

The Commission has assessed whether Microsoft would have the ability and incentive to foreclose competing distributors of PC video games that offer multi-game subscription services by including Activision Blizzard’s games in its own subscription service and withholding them from third-party subscription services. The Commission considers that the Transaction does not raise concerns in this regard, because Activision Blizzard does not license its PC video games to any multi-game subscription services, and the Commission did not find evidence that it would have started doing so absent the Transaction.

4.2.3.   Input foreclosure concerns vis-à-vis Microsoft’s rival distributors of console games

(15)

The Commission has assessed the risk of a targeted input foreclosure of rival distributors in the downstream market for distribution of console games through a restricted access to Activision Blizzard’s (AAA) shooter console games. The Commission considers that the Transaction does not raise concerns in this regard, for the following reasons.

(16)

In the first place, the Commission finds that Microsoft would likely not have the ability to engage in a targeted total or partial input foreclosure strategy with regard to rival distributors of console games.

(17)

First, the Commission found that console games of shooter genre and specifically Activision Blizzard’s AAA shooter console games are an important input for console game distributors. They attract a significant portion of users and account for a significant share of game-time on Xbox and PlayStation consoles and therefore impact consumers’ choice of console. Activision Blizzard’s AAA shooter Call of Duty franchise is widely regarded as one of or even the most successful franchise in the video gaming industry given its longevity, profitability and frequency of new title releases. In addition, Activision Blizzard’s console games and particularly Call of Duty are an important source of PlayStation’s revenue. Second, the Commission found that the merged entity has market power in the upstream market for development and publishing of AAA shooter (including battle royale) console games given significant market shares by revenue that exceeded 30 % on a worldwide basis in the last three calendar years.

(18)

However, the Commission considered that Sony would likely have effective and timely counter-strategies that it could deploy in order to react to potential foreclosure strategies. Sony is a vertically integrated distributor of console games, which develops and publishes popular AAA console games in its own game development studios, which would ensure the overall attractiveness of Sony’s PlayStation. Further, Sony is the leading distributor of console games with a very large share of the market worldwide and particularly in the EEA. Based on its strong position in console game distribution, Sony could, as it already did in the past, negotiate exclusivity agreements with other developers of popular AAA console games.

(19)

In the second place, the Commission finds that Microsoft would likely not have the incentive to engage in a targeted total or partial input foreclosure strategy with regard to rival distributors of console games. The Commission’s quantitative analysis showed that the switching rate in case of a total input foreclosure would be too low to make up for the likely losses of such a strategy. Therefore, restricting or degrading Sony’s access to Activision Blizzard’s console games would likely not be profitable for Microsoft because Microsoft’s losses resulting from such a foreclosure strategy would likely outweigh the potential gains.

(20)

In the third place, the Commission finds that regardless of whether Microsoft has either the ability or the incentive to foreclose rival distributors of console games, such strategy is unlikely to have any significant detrimental effect on competition in the downstream market for distribution of console games.

(21)

First, Sony holds a significant degree of market power in distribution of console games and is a leading supplier of console hardware worldwide and particularly in the EEA. Therefore, Sony has a large bargaining power and resources, which allow it to switch to alternative inputs by either developing successful AAA console games in-house or negotiating exclusivity with other independent developers and publishers. Second, the Commission has not found convincing evidence that the input foreclosure would cause significant losses to Sony’s user base so that it would inhibit Sony’s potential to invest in innovation and quality. In fact, the Commission’s quantitative analysis showed that the user switching rate in case of a total input foreclosure would not significantly impact Sony’s user base. Third, the Commission has not found convincing evidence that the partial foreclosure strategies implemented by the merged entity post-Transaction would significantly impede competition in the downstream market for console game distribution. To the contrary, past examples of partial exclusivity agreements for the distribution of Activision Blizzard’s Call of Duty have not had significant effects on Microsoft’s or Sony’s activities in the downstream market for distribution of console games. Finally, the majority of respondents to the market investigation do not believe the Transaction would have a negative impact on the market for the distribution of console game.

(22)

While the Commission’s assessment of the effects of the Transaction focused on Sony, Microsoft’s main competitor in distribution of console games, the Commission also found that Nintendo’s position in console game distribution is unlikely to be affected as a result of the Transaction. Only a small portion of Activision Blizzard’s game franchises are distributed by Nintendo. In particular, Call of Duty, which is Activision Blizzard’s largest console game by revenue is currently only distributed on the Xbox and PlayStation consoles.

(23)

Therefore, the Commission considers that the Transaction would not significantly impede effective competition on the downstream market for distribution of console video games, as a result of the merged entity’s targeted total or partial input foreclosure strategy by restricting or degrading access upstream to Activision Blizzard’s (AAA) shooter console video games.

4.2.4.   Input foreclosure concerns vis-à-vis Microsoft’s rival distributors of console or PC video games that offer cloud game streaming services

(24)

The Commission considers that the Notifying Party would have the ability and incentive to foreclose rival distributors of console and PC games via cloud game streaming services by restricting access to Activision Blizzard’s PC and console games.

(25)

While games normally run locally on the specific device where they are installed, cloud game streaming allows games to run in a remote server and to be streamed to the end user’s device. This enables users to play even complex video games on devices that would normally not support them. For this reason, cloud game streaming is largely ‘device-agnostic’: it allows, for example, to play a console game on a PC, or to play a complex PC game on an old or entry-level PC that would normally not support the game.

(26)

While cloud game streaming is a nascent industry trend, the Commission considers that it will become an important part of the distribution of PC and console games in the near future, based on industry reports and on feedback from the market investigation. Microsoft has invested significantly in cloud game streaming services and has made its cloud game streaming service Game Pass Ultimate the centrepiece of its ‘gamer-centric’ strategy, aiming at delivering games wherever gamers play, regardless of the device.

(27)

Activision Blizzard does not license its games to cloud game streaming services at the time of the decision. However, the Commission considers, primarily based on Activision Blizzard’s internal documents, that absent the Transaction Activision Blizzard would have likely started to license its games to cloud game streaming services, in particular those based on a buy-to-play business model (i.e., those platforms that allow users to stream games that they have already purchased from a digital storefront).

(28)

Considering the above, the Commission finds that Microsoft would have the ability to engage in a successful foreclosure strategy against rival cloud game streaming services, by making Game Pass Ultimate the only cloud game streaming service offering Activision Blizzard’s games. The Commission finds that Activision Blizzard’s games are an important input for cloud game streaming services, and therefore Activision Blizzard has market power in the development and publishing of console games. The Commission notes that the parties’ combined market share by revenue in 2022 in the development and publishing of console and PC video games is below the 30 % threshold. However, the parties’ share is higher in some possible narrower segments, especially when focusing on genres such as role-playing in the EEA and shooter games on a worldwide basis, and when looking at other metrics such as monthly active users or game-time. In this regard, role-playing and shooter games are particularly engaging and popular, and Activision Blizzard provides some of the most successful games in these genres, such as Call of Duty and World of Warcraft.

(29)

Post-Transaction, Microsoft would have the technical and contractual ability to withhold Activision Blizzard’s games from rival cloud game streaming services, and to release them for streaming exclusively via Game Pass Ultimate. In this case, rival cloud game streaming services would not have timely and effective counter-strategies. This is primarily because a large catalogue of popular content is key for their ability to compete, and PC and console games from other publishers would not be a satisfactory alternative to build a catalogue of games adequate to for third-party cloud gaming services to compete against Game Pass Ultimate, should the latter offer Activision Blizzard’s games with exclusivity.

(30)

The Commission also considers that Microsoft would have the incentive to foreclose rival distributors of PC and console games via cloud game streaming services. This is primarily because, given the high popularity of Activision Blizzard’s games, a foreclosure strategy would increase the number of gamers using Game Pass Ultimate’s cloud game streaming feature. Such increase would likely be significant, also thanks to the characteristics of Microsoft’s activities, which combine cloud game streaming services, subscription services and the Windows PC OS amongst others. The Commission considers that the losses from such foreclosure strategy would be limited compared to the gains.

(31)

Finally, the Commission considers that the effects of a foreclosure strategy on competition in the distribution of PC and console games would be significant. Cloud gaming is a rising trend and expected to become an important distribution channel, and a foreclosure strategy would raise barriers to entry or expansion of rival cloud game streaming services, which are generally not vertically integrated and would have to rely on a smaller pool of independent publishers. Furthermore, while cloud gaming is relatively small compared to the overall market, it is expected to increase significantly, and it is an important source of innovation.

(32)

Therefore, the Commission considers that the Transaction would significantly impede effective competition in the market for the distribution of PC and console games as a result of the merged entity withholding Activision Blizzard’s games from rival cloud game streaming services.

4.3.   Conglomerate effects

(33)

The Transaction gives rise to conglomerate links between Activision Blizzard’s games and Microsoft’s supply of the Windows PC OS. More specifically, the Commission considers, based on the results of the market investigation, that Microsoft would have the ability, post-Transaction, to foreclose rival providers of PC OS by tying the cloud game streaming of Activision Blizzard’s PC and console games to Windows.

(34)

First, the Commission finds that gaming is an important use case for PCs, and an important factor for competition between PC OS. Microsoft has a dominant position in the market for PC OS, with a worldwide market share of approximately [70-80] % (2022). As a consequence, most PC games, especially resource-intensive AAA games, are developed to run natively only on Windows, meaning that they can be downloaded and played locally only on a Windows PC. For that reason, the Commission did not find concerns that Microsoft could try to strengthen its position in PC OS by restricting the availability of Activision Blizzard to be played natively on other PC OS.

(35)

The Commission considers that cloud game streaming provides an effective way to play these games on other PC operating systems. The Commission further finds that gaming is an important factor for competition between PC OS and therefore considers that cloud game streaming, and in particular the streaming of Activision Blizzard’s games, would be important for non-Windows PC OS to compete more effectively with Windows. In this regard, it is recalled that absent the Transaction, Activision Blizzard would have started to license its games to cloud game streaming services. Consequently, given the popularity of Activision Blizzard’s games, Microsoft would have the ability to foreclose rival providers of PC OS by withholding Activision Blizzard games from other PC operating systems via cloud gaming. In such a scenario, the Commission considers that non-Windows PC OS would not have timely and effective counter-strategies available, primarily because, as explained above, third-party cloud game streaming services would not represent a satisfactory alternative.

(36)

As regards incentives to foreclose, since the Commission has already concluded that Microsoft would have an incentive to foreclose rival cloud game streaming providers, it considers that Microsoft has an even stronger incentive to do so when taking also the position of Windows in the PC OS market into account. In particular, the Commission considers that the gains derived from attracting or retaining users to Windows offset the foregone revenues from the distribution of Activision Blizzard’s games on third-party cloud game streaming services and PC OS.

(37)

Finally, the Commission concludes that, in light of the already dominant position of Microsoft in the market for PC OS, denying or degrading the availability of Activision Blizzard’s games via rival PC OS would have a significant impact on the market for PC OS. This is because a foreclosure strategy would increase users’ preference for Windows, thereby further increasing the barriers for rival PC OS to compete effectively. This compares to a counterfactual in which, absent the Transaction, such barriers would have been lowered, because Activision Blizzard would have likely licensed its games to third-party cloud gaming services, making them available for streaming on non-Windows OS.

(38)

The Commission therefore considers it likely that the transaction would significantly impede effective competition in the market for PC operating systems as a result of the merged entity foreclosing the supply of Activision Blizzard’s console and PC games to cloud game streaming providers and by not making GamePass Ultimate available on other PC operating systems.

4.4.   Conclusion

(39)

The decision, therefore, concludes that the notified concentration raises serious doubts as to its compatibility with the internal market with regard to (i) the input foreclosure of third-party distributors of PC and console games via cloud game streaming services and (ii) the foreclosure of rival providers of PC OS by tying the cloud game streaming of Activision Blizzard’s games to Windows.

5.   COMMITMENTS SUBMITTED BY THE NOTIFYING PARTY

(40)

In order to remove the competition concerns arising from the Transaction, the Notifying Party submitted commitments in Phase II. The Commission tested the first commitments submitted by Microsoft (the ‘Initial Commitments’) with market participants. Following feedback from this market test, the Notifying Party amended the commitments and submitted modified commitments (the ‘Revised Commitments’). The Commission undertook a second market test. The feedback from market participants has been shared with the Notifying Party which subsequently made further amendments to the commitment text and submitted a third remedy proposal (the ‘Final Commitments’).

(41)

All submitted commitments comprise two main elements: (i) a commitment to grant consumers the right to stream games for a period of 10 years (the ‘Consumer License Commitment’); and (ii) a commitment to grant to streaming providers a royalty-free license to stream games for a period of 10 years (the ‘Streaming Provider License Commitment’).

5.1.   The Initial Commitments

5.1.1.   The Consumer License Commitment

(42)

Under the Consumer License Commitment, Microsoft commits to grant consumers based in the EEA the right to stream all current and future PC games developed, either in part or in full, by the Activision Blizzard studios as listed in an annex to the Initial Commitments (‘Eligible Games’) from the closing date for a period of 10 years, by amending its end-user license agreements (‘Consumer License’) in accordance with Annex 3 of the Initial Commitments. Consumers will be granted this right regardless of whether the Eligible Game was obtained prior to or after the closing date.

5.1.2.   The Streaming Provider License Commitment

(43)

By the Streaming Provider License Commitment, Microsoft commits for a period of 10 years from the closing date to grant a royalty-free license to stream Eligible Games to streaming services in accordance with the terms in Annex 4 of the Initial Commitments (each a ‘Streaming Provider Licence’). In order to be considered eligible for this license, a streaming service needs to be either permitted by a game store authorized to sell Eligible Games (‘Authorized Game Store’) to provide access to Eligible Games; or offer access to Eligible Games through applications which do not require integration with an Authorized Game Store (in each case an ‘Eligible Streaming Service’).

(44)

Microsoft commits to grant Streaming Provider Licenses regardless of whether Microsoft currently streams or will in the future stream Eligible Games on its own cloud game streaming service. New releases, including publicly available beta versions and early access releases, will be accessible for streaming from the release of the game on a Microsoft Game Store (defined as Activision Blizzard’s Battle.net store or any successor digital PC Game Store) or any other store authorized to distribute an Activision Blizzard title.

(45)

In addition, Microsoft has entered into agreements with three cloud game streaming providers, namely NVIDIA, Boosteroid and Ubitus. These agreements include, for a period of 10 years from the closing date, a royalty-free, worldwide license to stream Eligible Games. As part of the Initial Commitments, Microsoft commits to grant these licenses under the terms as set out in annexes to the Initial Commitments.

(46)

Licenses granted under the streaming provider license commitment will be available on Microsoft’s website and subject to the following terms: (a) Unless otherwise agreed with the Authorized Game Stores, Microsoft may retain all revenue from game sales, in-app purchases and any other future game-related transactional revenue generated from Eligible Games on Eligible Streaming Services. (b) Eligible Streaming Services [business secrets concerning the market test questionnaire]; (ii) adapting their services, to the extent necessary in reaction to third-party rights mentioned under (i), to allow Consumers to stream Eligible Games; and (iii) compliance with relevant laws, including the Digital Services Act (3), the GDPR (4), the ePrivacy Directive (5), and privacy standards.

5.1.3.   Monitoring Trustee, Dispute Resolution and Duration

(47)

The Initial Commitments provide that a Monitoring Trustee must be appointed before the Notifying Party can close the Transaction. The Monitoring Trustee may in turn appoint an IT expert, or any advisors for corporate finance or legal advices, to assist in the performance of his or her duties and obligations.

(48)

A Fast Track Dispute Resolution is included, and will apply in cases where an Eligible Streaming Service (including Nvidia, Boosteroid and Ubitus), showing a sufficient legitimate interest, claims that Microsoft is failing to comply with its obligations arising from the Commitments.

(49)

The Initial Commitments would remain in effect for ten years from the closing date of the Transaction.

5.2.   The Revised Commitments

(50)

The Revised Commitments comprise the same two licenses as the Initial Commitments with the following improvements: (a) The licenses cover console games in addition to PC games. (b) To the extent different versions of a PC game for different operating systems exist, as well as all additional content, such as add-ons, download content or in-game purchases, such versions or content are expressly included under the licenses. (c) The licenses are available for cloud game streaming services that allow consumers to play, from the service provider’s cloud-based servers, PC or console games for which the consumers have already obtained a license for download of the game (including through either buy-to-play, free-to-play, or subscription). (d) The Streaming Provider License allows a streaming service to provide access to PC versions of Eligible Games by authenticating with the Microsoft Game Store and Microsoft commits, with consumer consent, to provide access to such data through a standard interface. This obligation is limited to streaming services that are already licensed to provide cloud game streaming by at least one major game publisher, as named in the Revised Commitments. (e) No circumvention via third-party IP rights. (f) The arbitration procedure can take place, at the choice of the cloud game streaming provider requesting it, in Brussels, Belgium.

5.3.   The Final Commitments

(51)

Compared to the Revised Commitments, the Final Commitments clarify the scope and limit the risk of circumvention or misinterpretation of the commitments. The main changes are: (a) The definition of an Authorized Game Store now also covers game stores that distribute Eligible Games via a multi-game subscription service. (b) The commitment to provide data about whether a consumer is entitled to play a game also covers Eligible Games for which a consumer has obtained a license via Game Pass. (c) The definition of Microsoft Game Store was amended to include any digital PC game store owned by Microsoft. (d) The list of major game publishers was expanded, the Commission is given a possibility to further amend this list during the term of the commitments and it is clarified that the determination of whether a streaming service is licensed to provide cloud game streaming by another major game publisher takes place at the time the Streaming Service seeks access to a Microsoft Game Store. (e) Microsoft commits not to terminate or degrade the existing availability of access to Eligible Games through publicly available application programming interfaces (‘APIs’).

5.4.   Assessment of the commitments submitted

(52)

In order to be acceptable, the proposed commitments must be capable of rendering a concentration compatible with the internal market as they prevent a significant impediment to effective competition in all relevant markets in which competition concerns were identified. In this case, the commitments needed to eliminate the competition concerns identified by the Commission, namely with respect to: (i) the input foreclosure of third-party distributors of PC and console games via cloud game streaming services and (ii) the foreclosure of rival providers of PC OS by tying Activision Blizzard’s games to Windows via Microsoft’s cloud game streaming service.

(53)

The decision concludes that the Final Commitments address the competition issues raised by the Transaction in their entirety. The Commission also concludes that the Final Commitments are capable of being implemented effectively and in a timely manner.

6.   CONCLUSION

(54)

For the reasons mentioned above, the decision concludes that, subject to full compliance with the commitments given by the Notifying Party, the proposed concentration will not significantly impede effective competition in the Internal Market or in a substantial part of it.

(55)

Consequently, the concentration should be declared compatible with the internal market and the functioning of the EEA Agreement, in accordance with Article 2(2) and Article 8(2) of the Merger Regulation and Article 57 of the EEA Agreement.

---

(1)  OJ L 24, 29.1.2004, p. 1.

(2)  AAA games refer to video games that are resource-intensive and complex to develop, and that offer advanced gaming experience and game-play mechanics.

(3)  Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market For Digital Services and amending Directive 2000/31/EC (Digital Services Act) (OJ L 277, 27.10.2022, p. 1).

(4)  Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1).

(5)  Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications) (OJ L 201, 31.7.2002, p. 37).

Announcement pursuant to Article 13 of Directive 2001/24/EC of the European Parliament and of the Council on the reorganisation and winding up of credit institutions: liquidation and subsequent winding up of FUCHS & ASSOCIES FINANCE SA

[Winding up of a Luxembourg financial institution]

(2023/C 285/06)

Invitation to lodge a claim. Time limits to be observed.

By judgment of 18 July 2023, the Tribunal d’arrondissement de et à Luxembourg (District Court of Luxembourg in Luxembourg City), sitting in commercial matters during its summer recess, ordered the liquidation and winding up of the public limited company FUCHS & ASSOCIES FINANCE SA (established and having its registered office at L-1724 Luxembourg, 47, boulevard Prince Henri, and registered in the Luxembourg Commercial and Companies Register under No B75842) and of its Belgian branch FUCHS & ASSOCIES FINANCE SA, SUCCURSALE DE BRUXELLES (established at Avenue de Tervueren 273, B-1150 Brussels) on the basis of Article 129(1)(2) of the amended Law of 18 December 2015 on resolution, reorganisation and winding-up measures for credit institutions and certain investment firms and on deposit-guarantee and investor-compensation schemes.

The judgment of 18 July 2023 stated that the winding-up order had the effect of withdrawing the authorisation granted to FUCHS & ASSOCIES FINANCE SA.

The same judgment appointed Ms Maria FARIA ALVES (Vice-President of the Tribunal d’arrondissement de et à Luxembourg) as official receiver and Alain RUKAVINA (lawyer with an address for service in Luxembourg) as liquidator.

Creditors are directed to submit their claims to the registry of the Tribunal de commerce de Luxembourg (Luxembourg Commercial Court) before 17.00 on 19 January 2024, failing which they will be time-barred.

Claims must be lodged in accordance with Article 134 of the amended Law of 18 December 2015 on resolution, reorganisation and winding-up measures for credit institutions and certain investment firms and on deposit-guarantee and investor-compensation schemes.

Claims drawn up in a currency other than EUR will be converted into that currency at the exchange rate prevailing on the day of the winding-up judgment as published by the European Central Bank, and the payment of all claims accepted shall be in that currency.

No application may be made by the party or by a third party to set aside the liquidation and winding-up judgment. The latter shall with immediate effect be provisionally enforceable notwithstanding any appeal, before registration and without surety.

The Commission de Surveillance du Secteur Financier (CSSF) (Financial Sector Supervisory Commission)or the State Prosecutor and the institution may lodge an appeal with the registry of the Tribunal d’arrondissement de et à Luxembourg. The time limit for appealing is fifteen (15) days from the date on which the judgment is notified by the registry of the Tribunal d’arrondissement de et à Luxembourg. Representation by a lawyer is not required.

For further information (with particular regard to the formalities relating to the lodging of claims), please consult the following website: www.fafliquidationjudiciaire.lu

Copy certified as correct.

Prior notification of a concentration

(Case M.11187 - MITSUI / CELANESE / NUTRINOVA JV)

Candidate case for simplified procedure

(Text with EEA relevance)

(2023/C 285/07)

---

(1)  OJ L 24, 29.1.2004, p. 1 (the ‘Merger Regulation’).

(2)  OJ C 366, 14.12.2013, p. 5.